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S.142

AN ACT RELATING TO CREATION OF DESIGNATED GROWTH CENTERS AND DOWNTOWN TAX CREDIT PROGRAM

It is hereby enacted by the General Assembly of the State of Vermont:

Sec. 1.  24 V.S.A. § 2790(d) is added to read:

(d)  The general assembly finds that sprawl is a pervasive problem as Vermont’s communities seek to accommodate growth and development while supporting the economic vitality of the state’s downtowns and village centers and maintaining the rural character and working landscape of the surrounding countryside.  The general assembly further finds that:

(1)  A large percentage of future growth should occur within duly designated growth centers that have been planned by municipalities in accordance with smart growth principles and Vermont’s planning and development goals pursuant to section 4302 of this title.

(2)  Designated growth centers, if properly located and scaled, will serve to support the state’s downtowns, village centers, and new town centers by encouraging new residential neighborhoods and compatible civic, commercial, and industrial uses to locate within proximity to historic community centers.

(3)  Designated growth centers will provide a cost-effective means of allocating and targeting limited municipal and state resources to those areas specifically planned to accommodate and support concentrated development and a large percentage of future growth.

(4)  Designated growth centers will provide a mechanism for concentrating private investment in those areas targeted for growth and development through public investments and incentives, and by establishing a process that will effectively reduce cost and delay in the permitting and approval of development.

(5)  Designated growth centers will accomplish these goals if they are economically viable, they are appropriately planned to accommodate future growth needs and a mix of uses, they originate at the municipal or regional level, and they are recognized by the state under state planning, financing, and permitting programs.

Sec. 2.  24 V.S.A. § 2791(12) – (15) are added to read:

(12)(A)  “Growth center” means an area of land that contains substantially the characteristics specified in subdivision (B) of this subdivision (12) and that is located in one or a combination of the following:

(i)  A designated downtown, village center, or new town center;

(ii)  An area of land that is in or adjacent to a designated downtown, village center, or new town center, with clearly defined boundaries that have been approved by one or more municipalities in their municipal plans to accommodate a significant share of growth anticipated by the municipality or municipalities over a 20‑year period.

(B)  A growth center contains substantially the following characteristics:

(i)  It incorporates a mix of uses that typically include or have the potential to include the following:  retail, office, services, and other commercial, civic, recreational, industrial, and residential uses, including affordable housing and new residential neighborhoods, within a densely developed, compact area;

(ii)  It incorporates public spaces that promote social interaction, such as public parks, civic buildings (e.g., post office, municipal offices), community gardens, and other formal and informal places to gather.

(iii)  It is organized around one or more central places or focal points, such as prominent buildings of civic, cultural, or spiritual significance or a village green, common, or square.

(iv)  It specifies densities of land development that are significantly greater than existing and allowable densities in parts of the municipality that are outside a designated downtown, village center, growth center, or new town center, or, in the case of municipalities characterized predominately by areas of existing dense urban settlement, it encourages in-fill development and redevelopment of historically developed land.

(v)  It is supported by existing or planned investments in infrastructure and encompasses a circulation system that is conducive to pedestrian and other nonvehicular traffic and that incorporates, accommodates, and supports the use of public transit systems.

(vi)  It results in compact concentrated areas of land development that are served by existing or planned infrastructure and are separated by rural countryside or working landscape.

(vii)  It is planned in accordance with the planning and development goals under section 4302 of this title to avoid the creation of strip development and sprawl, and it attempts to conform to smart growth principles.

(viii)  It is planned to reinforce the goals of 10 V.S.A. chapter 151, which include avoiding conversion of primary agricultural soils and adverse impacts on fragile features and natural and historic resources, wherever possible.

(13)  “Smart growth principles” means growth that:

(A)  Maintains the historic development pattern of compact village and urban centers separated by rural countryside.

(B)  Develops compact mixed-use centers at a scale appropriate for the community and the region.

(C)  Enables choice in modes of transportation.

(D)  Protects the state’s important environmental, natural and historic features, including natural areas, water quality, scenic resources, historic sites, and districts.

(E)  Serves to strengthen agricultural and forest industries and minimizes conflicts of development with these industries.

(F)  Balances growth with the availability of economic and efficient public utilities and services.

(G)  Supports a diversity of viable businesses in downtowns and villages, including locally-owned businesses.

(G)  Provides for housing that meets the needs of a diversity of social and income groups in each community.

(14)  “Sprawl” means dispersed, auto-dependent development outside compact urban and village centers, along highways, and in rural countryside.  Sprawl typically is characterized by the following:  excessive land consumption; low densities in comparison with older centers; lack of choice in ways to travel; fragmented open space, wide gaps between development and a scattered appearance; lack of choice in housing types and prices; separation of uses into distinct areas; repetitive one story development; commercial buildings surrounded by acres of parking; and lack of public spaces and community centers.

(15)  “Strip development” means linear commercial development along an arterial highway leading from an urban or village center or connecting two centers.  The characteristics of strip development, which need not all be present in order for strip development to exist, include the following:  use of individual curb cuts for each project along the highway; lack of connections between the projects, except for the highway connection; one story buildings containing a single type of use; little to no pedestrian circulation between projects on the strip; accessibility of individual projects primarily to automobiles; separation of projects by parking lots; lack of coordination between projects concerning individual project design, signage, lighting, parking, and landscaping, causing cluttered appearance; and narrow depth and broad street frontage of project parcels designed to take advantage of exposure on the arterial highway.

Sec. 3.  24 V.S.A. § 2792(f) is added to read:

(f)  In situations in which the state board is considering applications for designation as a growth center, in addition to the permanent members of the state board, membership shall include as a full voting member a member of the Vermont planners association (VPA) designated by the association; the chair of the natural resources board or a representative of the land use panel of the natural resources board designated by the chair; and a representative of a regional planning commission designated by the Vermont association of regional planning and development agencies (VAPDA) and an alternate representative designated by VAPDA to ensure that all applications are considered by a representative from a regional planning commission other than the one to which the applicant municipality is a member.  The alternate designated by VAPDA may vote only when the designated representative does not vote.

Sec. 4.  24 V.S.A. § 2793c is added to read:

§ 2793c.  DESIGNATION OF GROWTH CENTERS

(a)  Regional planning commission technical planning assistance.  Regional planning commissions, pursuant to section 4345a of this title, are uniquely positioned to assist municipalities with growth center planning.  To this end, at the request of a municipality contemplating growth center designation, the regional planning commission shall provide technical assistance in support of that designation. 

(1)  Technical support shall include:

(A)  preparing population, housing, and employment growth projections for a period of not less than 20 years;

(B)  GIS mapping, including identification of development capacity, land use, existing and planned infrastructure and service areas, fragile features, and physical constraints to development and associated features; and

(C)  build-out analyses for potential growth centers to document whether the geographic area of proposed growth centers will accommodate projected growth over a 20-year period in a manner that is consistent with the definition under subdivision 2791(12) of this title.

(2)  These projections and build-out analyses may be prepared on a municipal or regional basis.

(b)  Growth center designation application assistance.

(1)  By January 1, 2007, the land use panel of the natural resources board and the department of housing and community affairs shall constitute a planning coordination group which shall develop a coordinated process to:

(A)  ensure consistency between regions and municipalities regarding growth centers designation and related planning;

(B)  provide municipalities with a preapplication review process early in the local planning process;

(C)  coordinate state agency review on matters of agency interest; and

(D)  provide the state board with ongoing, coordinated staff support and expertise in land use, community planning, and natural resources protection.

(2)  This program shall include the following:

(A)  The preparation of a “municipal growth centers planning manual and implementation checklist” to assist municipalities and regional planning commissions to plan for growth center designation.  The implementation manual shall identify state resources available to assist municipalities and shall include a checklist indicating the issues that should be addressed by the municipality in planning for growth center designation.  The manual shall address other relevant topics in appropriate detail, such as:  methodologies for conducting growth projections and build-out analyses; defining appropriate boundaries that are not unduly expansive; enacting plan policies and implementation bylaws that accommodate reasonable densities, compact settlement patterns, and an appropriate mix of uses within growth centers; planning for infrastructure, transportation facilities, and open space; avoiding or mitigating impacts to fragile features and natural and historic resources, and primary agricultural lands; and strategies for maintaining the rural character and working landscape outside growth center boundaries. 

(B)  A preapplication review process that allows municipalities to submit a preliminary application to consist of a draft growth center map and a  brief explanation of planning and implementation policies that the municipality anticipates enacting in order to guide development inside the growth center and maintain the rural character of the surrounding area, to the extent that it exists.  Department and land use panel staff shall solicit comments from state agencies regarding areas of respective agency interest; evaluate the preliminary application for conformance with the requirements of this section; identify potential issues related to the growth center boundary and implementation tools; and provide recommendations for addressing those issues through adjustment to the growth centers boundary, revisions to planned implementation tools, or consideration of alternative implementation tools.  Preliminary review shall be available to municipalities while they are engaged in the municipal planning process so that recommendations may be considered prior to the adoption of the municipal plan and associated implementation measures.

(C)  Ongoing assistance to the state board to review applications for growth center designation, including coordinating review by state agencies on matters of agency interest and evaluating applications and associated plan policies and implementation measures for conformance with the definition under subdivision 2791(12) of this title and any designation requirements established under subsection (d) of this section.

(D)  The Vermont municipal planning grant program shall make funding for activities associated with growth centers planning a priority funding activity, and the Vermont community development program shall make funding for activities associated with growth centers planning a priority funding activity under the planning grant program.

(c)  Public involvement and review.  In addition to the public process required by the municipal planning and bylaw adoption process, the applicant municipality shall hold a local public hearing in advance of submitting an application to the state board.  This hearing shall be warned in the municipality, and notice of the hearing shall be provided to the planning commissions of adjoining municipalities and to the regional planning commission.  Any decision to apply for growth center designation shall be made by vote of the municipal legislative body, subject to the process established under sections 1972 and 1973 of this title.

(d)  Application and designation requirements.  Any application for designation as a growth center shall be to the state board and shall include the following:

(1)  a demonstration that the growth center proposal meets the definition of a growth center established in subdivision 2791(12) of this title;

(2)  a map and a conceptual plan for the growth center;

(3)  the identification of natural resource constraints and proposed mitigations;

(4)  when the secretary of agriculture, food and markets has developed guidelines in compliance with 6 V.S.A. § 8, the applicant shall demonstrate that the approved municipal plan and the regional plan both have been updated during any five-year plan readoption that has taken place since the date the secretary of agriculture developed those guidelines, have been used to identify areas proposed for agriculture, and have been designed so as to avoid the conversion of primary agricultural soils, wherever possible;

(5)  a demonstration:

(A)  that the applicant has a regionally confirmed planning process and an approved municipal plan, pursuant to section 4350 of this title,

(B)  that the approved plan contains provisions that are appropriate to implement the designated growth center proposal;

(C)  that the applicant has adopted bylaws in conformance with the municipal plan that are appropriate to implement the provisions in the plan that pertain to the designated growth center;

(D)  that the approved plan and the implementing bylaws anticipate retaining a more rural character in the area surrounding the growth center, to the extent that a more rural character exists, and provide reasonable protection to primary agricultural soils, productive forestland, and significant fragile features and natural and historic resources by excluding, to the extent practical, such areas within the proposed growth center and through strategies and standards to conserve those areas outside the proposed growth center;

(6)  a capital budget and program adopted in accordance with section 4426 of this title, together with a demonstration that existing and planned infrastructure is adequate to implement the growth center;

(7)  a build-out analysis and needs study that demonstrates that the growth center is of an appropriate size that is sufficient to accommodate projected population and development over a 20-year planning horizon in a manner that is consistent with the definition under subdivision 2791(12) of this title, and that demonstrates that the area is not oversized so as to allow for scattered or low-density development over that same period or the unnecessary extension of infrastructure to service low-density development;

(8)  a demonstration:

(A)  that the growth center will support and reinforce any existing designated downtown, village center, or new town center located in the municipality or adjacent municipality by accommodating concentrated residential neighborhoods and a mix and scale of commercial, civic, and industrial uses that is consistent with the anticipated demand for those uses within the municipality and region;

(B)  that the proposed growth center growth cannot reasonably be achieved within an existing designated downtown, village center, or new town center located within the applicant municipality;

(9)  any request for findings of fact or presumptions under one or more specific criteria of 10 V.S.A. § 6086(a) to be considered by the land use panel under subsection (e) of this section, as well as any supporting materials identified in consultation with the department and land use panel through the preliminary application review process.

(e)  Review by land use panel and issuance of Act 250 findings of fact and conclusions of law.  At the request of an applicant municipality, when an application for growth centers designation is submitted to the state board, or at a later time, a copy of the completed application, together with any requests for findings of fact and conclusions of law under specific criteria of 10 V.S.A. § 6086(a), may be submitted to the land use panel of the natural resources board for consideration in accordance with the following: 

(1)  In requesting findings of fact, the applicant municipality shall specify any criteria for which findings and conclusions are requested and the nature and scope of the findings that are being requested. 

(2)  The panel shall notify all landowners of land located within the proposed growth center, entities that would be accorded party status before a district commission under 10 V.S.A. § 6085(c)(1)(C) and (D), and all owners of land adjoining the proposed growth center of a hearing on the issue.  The panel may fashion alternate means of providing notice under this subdivision, with a goal of developing a means of notice that is more easily implemented, but that still provides adequate notice to potentially affected persons.  Persons notified may appear at the hearing and be heard, as may any other person who has a particularized interest protected by this chapter that may be affected by the decision.  The panel shall review the request in accordance with and shall issue findings of fact and conclusions of law under the applicable criteria of 10 V.S.A. § 6086(a) which are deemed to have been satisfied through the formal designation process and associated municipal plan policies, programs, and bylaws.  These findings and conclusions shall be subject to appeal pursuant to 10 V.S.A. § 6089 within 30 days of issuance.

(3)  The land use panel shall submit all findings of fact, together with any conditions required to comply with specific findings, to the state board.  The state board shall attach the findings and associated conditions to the notification of designation decision or otherwise shall forward the findings to the municipality according to the rules of the panel.

(4)  During the period of time in which a growth center designation remains in effect, any findings and conclusions issued by the panel shall be applicable to any subsequent application for approval by a district commission under chapter 151 of Title 10 and shall be binding upon the district commission, provided the proposed development project is located within the designated growth center, unless it is clearly shown that there was misrepresentation or that the facts relevant to the matter have so materially changed as to render the findings or conclusions clearly erroneous, contrary to the purposes of 10 V.S.A. chapter 151, and without basis in fact. 

(5)  During any appeal to the environmental court from a district commission decision relating to an application for a permit within a growth center, the court shall be bound by the findings of fact of the land use panel unless it is clearly shown that there was misrepresentation or that the facts relevant to the matter have so materially changed as to render the findings or conclusions clearly erroneous, contrary to the purposes of 10 V.S.A. chapter 151, and without basis in fact.

(f)  Designation decision.  Within 45 days of the receipt of a completed application, the state board shall designate a growth center if the state board finds:

(1)  that the proposal will cause no adverse impacts on fragile features and natural and historic resources or that any adverse impacts will be adequately mitigated;

(2)  that the applicant adequately has demonstrated compliance with the requirements of this section.

(g)  The state board shall review a growth center designation and the land use panel shall review any related presumptions, findings of fact and conclusions every five years.  For each applicant, the state board may adjust the schedule of review under this subsection so as to coincide with the review of the related and underlying designation of a downtown, village center, or new town center.

(1)  If, at the time of the review, the state board determines that the growth center no longer meets the standards for designation established in subsection (d) of this section, it may take any of the following actions:

(A)  require corrective action;

(B)  provide technical assistance through the coordinated assistance program; or

(C)  remove the growth center’s designation, with that removal not affecting any of the growth center’s previously awarded benefits.

(2)  The land use panel shall establish a process for reviewing a growth center in order to issue pertinent presumptions, findings of fact and conclusions of law under this subsection, and shall make any appropriate amendments to any findings and presumptions reviewed.

(h)  Concurrent designation.  A municipality may seek designation of a growth center concurrently with the designation of a downtown pursuant to section 2793 of this title, the designation of a village center pursuant to section 2793a of this title, or the designation of a new town center pursuant to section 2793b of this title.

(i)  Benefits from designation.  A growth center designated by the state board pursuant to this section is eligible for the following development incentives and benefits:

(1)  Financial incentives. 

(A)  Designation as a growth center under this section shall facilitate the qualification of any tax increment financing district formed within the growth center.  Such designation shall be deemed to fulfill the public purpose requirements for use of incremental tax revenues for public investments for infrastructure and improvements within the tax increment financing district as provided under the provisions of 32 V.S.A. § 5404a.

(B)  Vermont economic development authority (VEDA) incentives shall be provided on a priority basis to designated growth centers.

(2)  State infrastructure and development assistance.

(A)  With respect to state grants and other state funding, priority should be given to support infrastructure and other investments in public facilities located inside a designated growth center to include the following:

(i)  Agency of natural resources funding of new or expanded wastewater management facilities in accordance with the agency’s rules regarding priority for pollution abatement, pollution prevention and the protection of public health and water quality.

(ii)  Allocations from the state revolving fund for stormwater management.

(iii)  Technical and financial assistance for Brownfield remediation under the Vermont brownfield initiative.

(iv)  Community development block grant (CDBG) program implementation grants.

(v)  Establishment of a tax increment financing district under the provisions of subchapter 5 of chapter 53 of Title 24 permitted to use incremental property tax revenues for improvements within the district under the conditions and provisions of section 5404a of Title 32.

(B)  Whenever the commissioner of the department of buildings and general services or other state officials in charge of selecting a site are planning to lease or construct buildings suitable to being located in a designated growth center after determining that the option of utilizing existing space in a downtown development district pursuant to subdivision 2794(a)(13) of this title or within a designated village center pursuant to subdivision 2793a(c)(6) of this title or within a designated new town center pursuant to subdivision 2793b(c)(2) of this title is not feasible, the option of locating in a designated growth center shall be given thorough investigation and priority in consultation with the community.  The state shall ensure that new state office buildings and similar facilities that are accessed by the general public on a regular basis are sited in growth centers as well as other areas designated under this chapter whenever practical.

(C)  The department of education shall fund school rehabilitation in order to continue using existing schools in designated downtowns, village centers, new town centers, and growth centers and shall revise school siting requirements to support this policy.

(3)  State investments.  The state shall:

(A)  Expand the downtown transportation fund, as funds are available, to include access to downtowns.

(B)  Extend priority consideration for transportation enhancement, bicycle and pedestrian facilities, parking, and public transit projects to improvements located within or serving a designated growth center.

(C)  Grant to projects located within designated growth centers priority consideration for state housing renovation and affordable housing construction assistance programs.

(4)  Regulatory incentives.

(A)  Master plan permit application.  At any time after approval and formal designation of a growth center, any person or persons who exercise ownership or control over an area encompassing all or part of the designated growth center, any municipality within which a growth center has been formally designated, or any local or regional public development entity may apply for a master plan permit for that area or any portion of that area with the district commission pursuant to the rules of the land use panel.  Public entities making an application under this subdivision are not required to exercise ownership or control over the affected property.

(B)  Individual project permits within a designated growth center.  The district commission shall review individual Act 250 permit applications in accordance with the specific findings and presumptions issued by the land use panel under this section, if any, and in accordance with the conditions of any applicable master plan permit. 

Sec. 5.  24 V.S.A. § 4414 is amended to read:

§ 4414.  ZONING; PERMISSIBLE TYPES OF REGULATIONS

Any of the following types of regulations may be adopted by a municipality in its bylaws in conformance with the plan and for the purposes established in section 4302 of this title.

(1)  Zoning districts.  A municipality may define different and separate zoning districts, and identify within these districts which land uses are permitted as of right, and which are conditional uses requiring review and approval, including the districts set forth in this subdivision (1).

(A)  Downtown, village center, and new town center and related growth center districts.  The definition or purpose stated for local downtown, village center, or new town center, or growth center zoning districts should conform with the applicable definitions in section 2791 of this title.  Municipalities may adopt downtown, village center, or new town center, or growth center districts without seeking state designation under section 2793 chapter 76A of this title.  A municipality may adopt a manual of graphic or written design guidelines to assist applicants in the preparation of development applications.  The following objectives should guide the establishment of boundaries, requirements, and review standards for these districts:

* * *

Sec. 6.  10 V.S.A. § 6001 is amended to read:

§ 6001.  DEFINITIONS

When used in this chapter:

* * *

(3)(A)  “Development” means:

* * *

(B)  Notwithstanding the provisions of subdivision (3)(A) of this section, if a project consists exclusively of any combination of mixed income housing or mixed use and is located entirely within a growth center designated pursuant to 24 V.S.A. § 2793c in which the municipality has elected to conduct regulatory hearings in accordance with the Municipal Administrative Procedures Act under 24 V.S.A. chapter 36, or within a downtown development district designated pursuant to 24 V.S.A. § 2793 regardless of whether the municipality has elected to conduct regulatory hearings in accordance with the Municipal Administrative Procedures Act, “development” means:

* * *

(iv)  Construction of mixed income housing with 20 25 or more housing units or a mixed use project with 20 25 or more housing units, in a municipality of less than 5,000.

* * *

(C)  For the purposes of determining jurisdiction under subdivisions (3)(A) and (3)(B) of this section:

(i)  Housing units constructed by a person partially or completely outside a designated downtown development district or designated growth center shall not be counted to determine jurisdiction over housing units constructed by a person entirely within a designated downtown development district or designated growth center.

(ii)  Within any continuous period of five years, housing units constructed by a person entirely within a designated downtown district or designated growth center shall be counted together with housing units constructed by a person partially or completely outside a designated downtown development district or designated growth center to determine jurisdiction over the housing units constructed by a person partially or completely outside the designated downtown development district or designated growth center and within a five-mile radius.

(iii)  All housing units constructed by a person within a designated downtown development district or designated growth center within any continuous period of five years, commencing on or after the effective date of this subdivision, shall be counted together.

* * *

(v)  Notwithstanding subdivision (3)(C)(iii) of this section, any affordable housing units, as defined by this section, that are subject to housing subsidy covenants as defined in 27 V.S.A. § 610 that preserve their affordability for a period of 99 years or longer, and that are constructed by a person within a designated downtown development district, designated village center, or designated growth center, shall count toward the total number of housing units used to determine jurisdiction only if they were constructed within the previous 12-month period, commencing on or after the effective date of this subdivision.

* * *

(8)  “Forest and secondary agricultural Productive forest soils” means  those soils which are not primary agricultural soils but which have a reasonable potential for commercial forestry or commercial agriculture, and which have not yet been developed.  In order to qualify as productive forest or secondary agricultural soils, the land containing such soils shall be characterized by of a size and location, relative to adjoining land uses, natural conditions condition, and ownership patterns so that those soils will be capable of supporting or contributing to present or potential a commercial forestry or commercial agriculture operationIf a tract of land includes other than forest or secondary agricultural soils only the forest or secondary agricultural soils shall be impacted by criteria relating specifically to such soils.  Land use on those soils may include commercial timber harvesting and specialized forest uses, such as maple sugar or Christmas tree production.

* * *

(15)  “Primary agricultural soils” means soils which have a potential for growing food and forage crops, are sufficiently well drained to allow sowing and harvesting with mechanized equipment, are well supplied with plant nutrients or highly responsive to the use of fertilizer, and have soil map units with the best combination of physical and chemical characteristics that have a potential for growing food, feed, and forage crops, have sufficient moisture and drainage, plant nutrients or responsiveness to fertilizers, few limitations for cultivation or limitations which may be easily overcome.  In order to qualify as primary agricultural soils, the, and an average slope of the land containing such soils does that does not exceed 15 percent, and such land is.  Present uses may be cropland, pasture, regenerating forests, forestland, or other agricultural or silvicultural uses.  However, the soils must be of a size and location, relative to adjoining land uses, so that those soils will be capable, following removal of any identified limitations, of supporting or contributing to an economic or commercial agricultural operation.  If a tract of land includes other than primary agricultural soils, only the primary agricultural soils shall be impacted by criteria relating specifically to such soils.  Unless contradicted by the qualifications stated in this subdivision, primary agricultural soils shall include important farmland soils map units with a rating of prime, statewide, or local importance as defined by the Natural Resources Conservation Service (N.R.C.S.) of the United States Department of Agriculture (U.S.D.A.).

* * *

(30)  “Designated growth center” means a growth center designated by the Vermont downtown development board under the provisions of 24 V.S.A. chapter 76A.

Sec. 7.  10 V.S.A. § 6086(a)(9) is amended to read:

(9)  Is in conformance with a duly adopted capability and development plan, and land use plan when adopted.  However, the legislative findings of sections 7(a)(1) through 7(a)(19) of this act shall not be used as criteria in the consideration of applications by a district commission.

* * *

(B)  Primary agricultural soils.  A permit will be granted for the development or subdivision of primary agricultural soils only when it is demonstrated by the applicant that, in addition to all other applicable criteria, either, the subdivision or development will not significantly reduce result in any reduction in the agricultural potential of the primary agricultural soils; or,:

(i)  the applicant can realize a reasonable return on the fair market value of his land only by devoting the primary agricultural soils to uses which will significantly reduce their agricultural potential suitable mitigation will be provided for any reduction in the agricultural potential of the primary agricultural soils caused by the development or subdivision, in accordance with section 6093 of this title and rules adopted by the land use panel; and

(ii)  there are no nonagricultural or secondary lands other than primary agricultural soils owned or controlled by the applicant which are reasonably suited to the purpose of the development or subdivision; and

(iii)  the subdivision or development has been planned to minimize the reduction of agricultural potential by providing for reasonable population densities, reasonable rates of growth, and the use of cluster planning and new community planning designed to economize on the cost of roads, utilities and land usage of the primary agricultural soils through innovative land use design resulting in compact development patterns, so that the remaining primary agricultural soils on the project tract are capable of supporting or contributing to an economic or commercial agricultural operation; and

(iv)  the development or subdivision will not significantly interfere with or jeopardize the continuation of agriculture or forestry on adjoining lands or reduce their agricultural or forestry potential.

(C)  Forest and secondary agricultural Productive forest soils.  A permit will be granted for the development or subdivision of productive forest or secondary agricultural soils only when it is demonstrated by the applicant that, in addition to all other applicable criteria, either, the subdivision or development will not significantly reduce result in any reduction in the potential of those soils for commercial forestry, including but not limited to specialized forest uses such as maple production or Christmas tree production, potential of those or adjacent primary agricultural soils for commercial agriculture; or:

(i)  the applicant can realize a reasonable return on the fair market value of his land only by devoting the forest or secondary agricultural soils to uses which will significantly reduce their forestry or agricultural potential the development or subdivision will not significantly interfere with or jeopardize the continuation of agriculture or forestry on adjoining lands or reduce their agricultural or forestry potential; and

(ii)  there are no nonforest or secondary agricultural lands other than productive forest soils owned or controlled by the applicant which are reasonably suited to the purpose of the development or subdivision; and

(iii)  the subdivision or development has been planned to minimize the reduction of forestry and agricultural potential by providing for reasonable population densities, reasonable rates of growth, and the use of cluster planning and new community planning designed to economize on the cost of roads, utilities and land usage the potential of those productive forest soils through innovative land use design resulting in compact development patterns, so that the remaining forest soils on the project tract may contribute to a commercial forestry operation.

Sec. 8.  10 V.S.A. § 6093 is added to read:

§ 6093.  mitigation of PRIMARY Agricultural SOILS

(a)  Mitigation for loss of primary agricultural soils.  Suitable mitigation for the conversion of primary agricultural soils necessary to satisfy subdivision 6086(a)(9)(B)(i) of this title shall depend on where the project tract is located. 

(1)  Project located in growth center.  If the project tract is located in a designated growth center, the applicant need not undergo the review process otherwise required under subdivisions 6086(a)(9)(B)(ii) and (iii) of this title.  An applicant complying with the remaining provisions of subdivision 6086(b)(9)(B) of this title shall deposit an offsite mitigation fee into the Vermont housing and conservation trust fund established under section 312 of this title for the purpose of preserving primary agricultural soils of equal or greater value with the highest priority given to preserving prime agricultural soils as defined by the U.S.D.A.  Any required offsite mitigation fee shall be derived by:

(A)  determining the number of acres of primary agricultural soils affected by the proposed development or subdivision;

(B)  multiplying the number of affected acres of primary agricultural soils by a factor resulting in a ratio established as follows:

(i)  for general development within a growth center or within a permitted industrial park in existence as of January 1, 2006, the ratio shall be 1:1, protected acres to acres of affected primary agricultural soils;

(ii)  for residential construction that has a density of at least 10 units of housing per acre and that meets the definition of affordable housing established in this chapter, no mitigation shall be required.  However, all affordable housing units shall be subject to housing subsidy covenants, as defined in 27 V.S.A. § 610, that preserve their affordability for a period of 99 years or longer.

(C)  multiplying the resulting product by a “price‑per‑acre” value, which shall be based on the amount that the secretary of agriculture, food and markets has determined to be the recent, per-acre cost to acquire conservation easements for primary agricultural soils in the same geographic region as the proposed development or subdivision. 

(2)  Project located outside designated growth center.  If the project tract is not located in a designated growth center, the applicant shall be required to obtain affirmative findings on subdivisions 6086(a)(9)(B)(ii) – (iv) of this title.  In this instance, mitigation shall be provided on-site in order to preserve primary agricultural soils for present and future agricultural use, with special emphasis on preserving prime agricultural soils.  Preservation of primary agricultural soils shall be accomplished through innovative land use design resulting in compact development patterns which will maintain a sufficient acreage of primary agricultural soils on the project tract capable of supporting or contributing to an economic or commercial agricultural operation and shall be enforceable by permit conditions issued by the district commission.  The number of acres of primary agricultural soils to be preserved shall be derived by:

(A)  determining the number of acres of primary agricultural soils affected by the proposed development or subdivision; and

(B)  multiplying the number of affected acres of primary agricultural soils by a factor based on the quality of those primary agricultural soils, and other factors as the secretary of agriculture, foods and markets may deem relevant, including the soil’s location; accessibility; tract size; existing agricultural operations; water sources; drainage; slope; the presence of ledge or protected wetlands; and the infrastructure of the existing farm or municipality in which the soils are located; and the N.R.C.S. rating system for Vermont soils.  This factor shall result in a ratio of no less than 2:1, but no more than 3:1, protected acres to acres of impacted primary agricultural soils.

(3)  Mitigation flexibility.

(A)  Notwithstanding the provisions of subdivision (1) of this subsection pertaining to a development or subdivision on primary agricultural soils within a designated growth center, the district commission may, in appropriate circumstances, require onsite mitigation with special emphasis on preserving prime agricultural soils if that action is deemed consistent with the agricultural elements of local and regional plans and the goals of section 4302 of Title 24.  In this situation, the approved plans must indicate, in unambiguous terms, that certain soils should be preserved inside growth centers.  All factors used to calculate suitable mitigation acreage or fees, or some combination these measures, shall be as specified in subdivision (1) of this subsection.

(B)  Notwithstanding the provisions of subdivision (2) of this subsection pertaining to a development or subdivision on primary agricultural soils outside a designated growth center, the district commission may, in appropriate circumstances, approve offsite mitigation or some combination of onsite and offsite mitigation if that action is deemed consistent with the agricultural elements of local and regional plans and the goals of section 4302 of Title 24.  The use of offsite mitigation for projects located outside designated growth centers shall be approved only in situations where the public interest is clearly benefited.  All factors used to calculate suitable mitigation acreage or fees, or some combination these measures, shall be as specified in subdivision (2) of this subsection.

(b)  Easements required for protected lands.  All primary agricultural soils preserved for commercial or economic agricultural use by the Vermont housing and conservation board pursuant to this section shall be protected by permanent conservation easements (grant of development rights and conservation restrictions) conveyed to a qualified holder, as defined in section 821 of this title, with the ability to monitor and enforce easements in perpetuity.

Sec. 9.  AGRICULTURAL LANDS PLANNING CRITERIA AND SOILS

             INVENTORY

(a)  By no later than January 15, 2007 the secretary of agriculture, food and markets in compliance with the requirements of 6 V.S.A. § 8 shall establish guidelines for use by the municipal and regional planning commissions of the state in identifying agricultural lands, and shall provide those guidelines to the senate and house committees on agriculture and on natural resources and energy.

(b)  The agency of agriculture, food and markets shall work with the federal Natural Resources Conservation Service and the Vermont Center for Geographic Information to develop a state soils inventory.  The soils inventory shall be produced in map form and shall include, in digitized form to the extent available, the location of primary agricultural soils in the state that remain undeveloped.  The agency shall present the inventory to the committees on agriculture and natural resources and energy of the general assembly by January 15, 2007, together with an analysis of options and recommendations with respect to how to treat the state’s remaining prime agricultural soils that are not developed, and how to give a higher priority to the conservation of those soils.  The recommendations shall be developed in consultation with the Vermont housing and conservation board and the regional planning commissions, and shall address the means by which information developed in the survey shall be made available to regional and municipal planning commissions.

(c)  The state shall urge the federal Natural Resources Conservation Service to complete the soils mapping of Essex and Caledonia counties and to certify the soils mapping of Chittenden County.

Sec. 10.  TRANSITION

After initiating and prior to the completion of the designation process, a municipality with a growth center identified in a regionally approved town plan may apply by June 1, 2008 to the planning and coordination group established under 24 V.S.A. § 2793c for the designated growth center agricultural mitigation benefits as described in 10 V.S.A. § 6093.  The planning and coordination group will recommend to the expanded downtown development board (state board) that the benefits of 10 V.S.A. § 6093 be granted to the municipality if it determines that the growth center in question meets the definition set forth in 24 V.S.A. § 2791(12).  The state board will review the information provided by the municipality and the planning and coordination group and shall award the benefit, if warranted.  This section shall be repealed on September 1, 2008.

* * * Vermont Downtown and Village Center Tax Credit Program * * *

Sec. 11.  32 V.S.A. chapter 151, subchapter 11J is added to read:

Subchapter 11J.  Vermont Downtown and Village Center

Tax Credit Program

§ 5930aa.  DEFINITIONS

As used in this subchapter:

(1)  “Qualified applicant” means an owner or lessee of a qualified building involving a qualified project, but does not include a religious entity operating with a primarily religious purpose; a state or federal agency or a political subdivision of either; or an instrumentality of the United States.

(2)  “Qualified building” means an income‑producing building built prior to 1983, located within a designated downtown or village center and not used solely as a single‑family residence.

(3)  “Qualified code improvement project” means a project:

(A)  To install or improve platform lifts suitable for transporting personal mobility devices, elevators, sprinkler systems, and capital improvements in a qualified building, and the installations or improvements are required to bring the building into compliance with the statutory requirements and rules regarding fire prevention, life safety, and electrical, plumbing, and accessibility codes as determined by the department of public safety.

(B)  To abate lead paint conditions or other substances hazardous to human health or safety in a qualified building.

(C)  To redevelop a contaminated property in a designated downtown or village center under a plan approved by the secretary of natural resources pursuant to 10 V.S.A. § 6615a.

(4)  “Qualified expenditures” means construction-related expenses directly related to the project for which the tax credit is sought.

(5)  “Qualified façade improvement project” means the rehabilitation of the façade of a qualified building that contributes to the integrity of the designated downtown or designated village center.  Façade improvements to qualified buildings listed, or eligible for listing, in the State or National Register of Historic Places must be consistent with Secretary of the Interior Standards, as determined by the Vermont division for historic preservation.

(6)  “Qualified historic rehabilitation project” means an historic rehabilitation project that has received federal certification for the rehabilitation project.

(7)  “Qualified project” means a qualified code improvement, façade improvement, or historic rehabilitation project as defined by this subchapter.

(8)  “State board” means the Vermont downtown development board established pursuant to chapter 76A of Title 24.

§ 5930bb.  ELIGIBILITY AND ADMINISTRATION

(a)  Qualified applicants may apply to the state board to obtain the tax credits provided by this subchapter for qualified code improvement, façade improvement, or historic rehabilitation projects within one year of completion of the qualified project.

(b)  To qualify for any of the tax credits under this subchapter, expenditures for the qualified project must exceed $5,000.00.

(c)  Application shall be made in accordance with the guidelines set by the state board.

§ 5930cc.  DOWNTOWN AND VILLAGE CENTER PROGRAM TAX

                 CREDITS

(a)  Historic rehabilitation tax credit.  The qualified applicant of a qualified historic rehabilitation project shall be entitled, upon the approval of the state board, to claim against the taxpayer’s state individual income tax, corporate income tax, or bank franchise or insurance premiums tax liability a credit of ten percent of qualified rehabilitation expenditures as defined in the Internal Revenue Code, 26 U.S.C. § 47(c), properly chargeable to the federally certified rehabilitation.

(b)  Façade improvement tax credit.  The qualified applicant of a qualified façade improvement project shall be entitled, upon the approval of the state board, to claim against the taxpayer’s state individual income tax, state corporate income tax, or bank franchise or insurance premiums tax liability a credit of 25 percent of qualified expenditures up to a maximum tax credit of $25,000.00.

(c)  Code improvement tax credit.  The qualified applicant of a qualified code improvement project shall be entitled, upon the approval of the state board, to claim against the taxpayer’s state individual income tax, state corporate income tax, or bank franchise or insurance premiums tax liability a credit of 50 percent of qualified expenditures up to a maximum tax credit of $12,000.00 for installation or improvement of a platform lift, a maximum tax credit of $50,000.00 for installation or improvement of an elevator, a maximum tax credit of $50,000.00 for installation or improvement of a sprinkler system, and a maximum tax credit of $25,000.00 for the combined costs of all other qualified code improvements.

§ 5930dd.  CLAIMS; AVAILABILITY

(a)  A taxpayer claiming credit under this subchapter shall submit to the department of taxes with the first return on which a credit is claimed a copy of the state board’s tax credit allocation.

(b)  A credit under this subchapter shall be available for the first tax year in which the qualified project is complete.

(c)  The initial claim for any tax credit awarded under this subchapter shall be made on a tax return filed within five years after the award is granted by the state board.

(d)  Any unused credit under this section may be carried forward for no more than nine tax years following the first year for which the tax credit is claimed.

(e)  In lieu of using a tax credit to reduce its own tax liability, an applicant may request the credit in the form of a mortgage credit certificate that a bank may accept in return for adjusting the rate or term of the applicant’s mortgage or loan related to a leasehold interest on the qualified building.  The amount of the mortgage credit certificate shall equal the unused portion of the credit allowable under this section.  An applicant requesting a mortgage credit certificate subsequent to qualifying for a tax credit shall provide to the state board a copy of all returns that showed a credit taken under this section.  A bank that purchases a mortgage credit certificate may use it to reduce its franchise tax liability under section 5836 of this title starting the first tax year in which the qualified building is placed back in service after completion of the qualified project or in a subsequent year.

§ 5930ee.  LIMITATIONS

Beginning in fiscal year 2007 and thereafter, the state board may award tax credits to all qualified applicants under this subchapter, provided that:

(1)  The total amount of tax credits awarded annually, together with sales tax reallocated under section 9819 of this title, does not exceed $1,500,000.00.

(2)  A total annual allocation of no more than 30 percent of these tax credits in combination with sales tax reallocation may be awarded in connection with all of the projects in a single municipality.

(3)  Façade tax credits shall not be available for projects that qualify for the federal rehabilitation tax credit.

(4)  No credit shall be allowed under this subchapter for the cost of acquiring any building or interest in a building.

(5)  No credit under this subchapter shall be allowed for both an owner and a lessee on the same unit.

(6)  Qualified buildings for which tax credits are granted under this subchapter are ineligible for the same tax credits for a two-year period from the initial award date.

§ 5930ff.  RECAPTURE

If within five years after completion of the qualified project either of the following events occurs, the taxpayer shall be liable for a recapture penalty in an amount equal to the total tax credit awarded:

(1)  The state board finds that the taxpayer performed any work on the qualified project inconsistent with the approved application, knowingly failed to supply any information, or supplied incorrect or untrue information required by the state board or failed to comply with any award condition required by the state board.

(2)  The National Park Service revoked certification for unapproved alterations or for work not done as described in the historic preservation certification application.

Sec. 12.  32 V.S.A. § 9819(b) and (c) are amended to read:

(b)(1) In any fiscal year after 1998 Beginning in fiscal year 2007, the Vermont downtown development board, established under 24 V.S.A. § 2792, may certify for allocation to municipalities sales tax revenues under this section, so that the total shall not exceed $1,000,000.00 $1,500,000.00, when considered together with the following:

(A)  credits Credits awarded under sections 5930n and 5930p subsections 5930cc(a) and (b) of this title, concerning substantial historic rehabilitation and historic and older building rehabilitation; qualified historic rehabilitation projects and qualified façade improvement projects.

(B)  credits Credits awarded under section 5930q subsection 5930cc(c) of this title, concerning platform lifts, elevators and sprinklers; and

(C)  credits awarded under section 5930r of this title, concerning village general stores and post office structures qualified code improvement projects.

(2)  A total annual allocation of no more than 40 30 percent of these tax credits in combination with sales tax reallocation may be awarded in connection with all of the projects in a single municipality.

(c)  For the purposes of this section:

* * *

(2)  “Qualified project” means expansion or rehabilitation of contiguous real property that is or will be used at the completion of the expansion or rehabilitation as a structure in a downtown development district designated under chapter 76A of Title 24, but only to the extent that the expansion or rehabilitation becomes an integral component of the real property and the project does not seek qualification for either tax credit authorized under section 5930n or 5930p subsections 5930cc(a) or (b) of this title.  “Qualified project” also means new construction of contiguous real property that will be used at the completion of the construction as a structure in a downtown development district designated under chapter 76A of Title 24 but only to the extent that the new construction is compatible with the buildings that contribute to the integrity of the district in terms of materials, features, size, scale and proportion, and massing of buildings.

Sec. 13.  24 V.S.A. § 2793a(c) is amended to read:

(c)  A village center designated by the state board pursuant to subsection (a) of this section is eligible for the following development incentives and benefits:

* * *

(4)  a state tax credit of five percent under section 5930n of Title 32 to owners or lessees of certified historic structures located in village centers for qualified expenditures;

(5)  a state tax credit of 50 percent under section 5930r of Title 32 to owners or lessees of buildings in village centers that serve as general stores or house post offices; The following state tax credits for projects located in a designated village center:

(i)  A state historic rehabilitation tax credit of ten percent under 32 V.S.A. § 5930cc(a) that meets the requirements for the federal rehabilitation tax credit. 

(ii)  A state façade improvement tax credit of 25 percent under 32 V.S.A. § 5930cc(b).

(iii)  A state code improvement tax credit of 50 percent under 32 V.S.A. § 5930cc(c).

(6)  whenever (5)  Whenever the commissioner of the department of buildings and general services or other state officials in charge of selecting a site are planning to lease or construct buildings suitable to being located in a village center after determining that the option of utilizing existing space in a downtown development district pursuant to subdivision 2794(a)(14) of this title is not feasible, the option of utilizing existing space in a designated village center shall be given thorough investigation and priority, in consultation with the community.

Sec. 14.  24 V.S.A. § 2794(a) is amended to read:

(a)  Upon designation by the Vermont downtown development board under section 2793 of this title, a downtown development district and projects in a downtown development district shall be eligible for the following:

(1)  priority Priority consideration by any agency of the state administering any state or federal assistance program providing funding or other aid to a municipal downtown area with consideration given to such factors as the costs and benefits provided and the immediacy of those benefits, provided the project is eligible for the assistance program;.

(2)  a state tax credit of ten percent under section 5930n of Title 32 to owners or long term lessees of certified historic structures located in downtown development districts that meet the requirements for the federal rehabilitation tax credit; The following state tax credits:

(A)  A state historic rehabilitation tax credit of 10 percent under 32 V.S.A. § 5930cc(a) that meets the requirements for the federal rehabilitation tax credit.

(B)  A state façade improvement tax credit of 25 percent under 32 V.S.A. § 5930cc(b).

(C)  A state code improvement tax credit of 50 percent under 32 V.S.A. § 5930cc(c).

(3)  a state tax credit of 25 percent under section 5930p of Title 32 to owners or lessees of older and historic buildings located in downtown development districts for qualified expenditures;

(4)  a A planning grant, in an amount not to exceed $8,000.00 per site, for an initial site assessment of a suspected contaminated site, if the site otherwise qualifies under the community development block grant program in chapter 29 of Title 10;.

(5)  financing (4)  Financing of transportation projects under the state infrastructure bank, created under chapter 12 of Title 10;.

(6)  assistance (5)  Assistance from the secretary of the agency of natural resources for current owners and prospective purchasers who otherwise qualify under the redevelopment of contaminated sites program under subsection 6615a(f) of Title 10, or in the case of current owners, who are innocent owners.  For the purposes of this subsection, an “innocent owner” is an owner who did not do any of the following:

(A)  hold Hold an ownership interest in the property or in any related fixtures or appurtenances, excluding a secured lender’s holding indicia of ownership in the property primarily to assure the repayment of a financial obligation at the time of any disposal of hazardous materials on the property;.

(B)  directly Directly or indirectly cause or contribute to any releases or threatened releases of hazardous materials at the property;.

(C)  operate Operate, or control the operation, at the property of a facility for the storage, treatment, or disposal of hazardous materials at the time of the disposal of hazardous materials at the property;.

(D)  dispose Dispose of, or arrange for the disposal of hazardous materials at the property; or.

(E)  generate Generate the hazardous materials that were disposed of at the property;.

(7)  technical (6)  Technical assistance by the department of housing and community affairs with regard to planning and coordination issues, including but not limited to, adaptive reuse of buildings within the district, development of a marketing plan for the downtown district that includes a heritage tourism component, development of a program to encourage merchants and building owners to rehabilitate, restore, and improve building façades, and, in coordination with the agency of transportation, planning for multi-modal transportation needs of the community;.

(8)  hospitality (7)  Hospitality training to be arranged by the department of tourism and marketing;.

(9)  promotion (8)  Promotion of the downtown development district by the department of tourism and marketing as part of the department’s integrated marketing and promotion program;.

(10)  consistent (9)  Consistent with the department’s available resources and subject to the department’s priority for ensuring public safety, technical support from the department of labor and industry public safety for the rehabilitation of older and historic buildings;.

(11)  a (10)  A rebate of the cost of a qualified sprinkler system in an amount not to exceed $2,000.00 for building owners or lessees.  Rebates shall be paid by the department of labor and industry public safety.  To be qualified, a sprinkler system must be a complete automatic fire sprinkler system installed in accord with department of labor and industry public safety rules in an older or historic building that is certified for a state tax credit under either section 5930n or section 5930p subsection 5930cc(a) or (b) of Title 32 and is located in a downtown development district.  A total of no more than $40,000.00 of rebates shall be granted in any calendar year by the department.  If in any year applications for rebates exceed this amount, the department shall grant rebates for qualified systems according to the date the building was certified for a state tax credit under section 5930n or section 5930p subsection 5930cc(a) or (b) of Title 32 with the earlier date receiving priority;.

(12)  participation (11)  Participation in the downtown transportation and related capital improvement fund program established by section 2796 of this title;.

(13)  when considering leasing existing space or constructing a building,

(12)  Priority for locating proposed state functions by the commissioner of buildings and general services or other state officials, in consultation with the legislative body of a municipality and based on the suitability of the state function to a downtown location, shall give priority to locating proposed state functions in a downtown;.

(14)  a (13)  A reallocation of receipts related to the tax imposed on sales of construction materials as provided in 32 V.S.A. § 9819;.

(15)  a state tax credit under section 5930q of Title 32 for the installation or improvement of platform lifts, elevators or sprinkler systems;

(16)  the (14)  The authority to create a special taxing district pursuant to chapter 87 of this title for the purpose of financing both capital and operating costs of a project within the boundaries of a downtown development district.

Sec. 15.  EFFECTIVE DATE; TAX CREDIT FILING LIMITATIONS;

              CARRY FORWARD PROVISIONS

(a)  This act shall take effect July 1, 2006.

(b)  The tax credits created in Sec. 11 of this act are enacted to replace the tax credits found in Title 32.  After June 30, 2006, the Vermont downtown development board established under chapter 76A of Title 24 may no longer award the following tax credits found in Title 32: 

(1)  Section 5930n, tax credit for substantial rehabilitation of historic buildings also claiming federal rehabilitation credit.

(2)  Section 5930p, rehabilitation tax credit for older or historic buildings.

(3)  Section 5930q, tax credit for platform lifts, elevators, or sprinkler systems.

(4)  Section 5930r, tax credit for code improvements to commercial buildings.

(c)  In order to retain the right to any tax credit issued under 32 V.S.A. §§ 5930n, 5930p, 5930q, and 5930r, the initial claim must be made on a tax return filed within five years after the effective date of this act, unless extended by the downtown development board for a period not to exceed five years.

(d)  Credits awarded by the Vermont downtown development board, established under chapter 76A of Title 24, before July 1, 2006 may be carried forward to reduce the taxpayer’s tax liability pursuant to the laws that governed at the time of the award.

 



Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont


www.leg.state.vt.us